Oil Slumps on Weak EIA as Tariff Rollback Gains Traction

Crude fell yesterday on a weak EIA / API report while macro volatility picked up across the risk-space. A hot ADP payrolls figure alongside solid Mfg & Services PMI data drew a sharp reaction out of the bond market. This came alongside growing evidence that congress may succeed in blocking almost all of the Trump tariffs.

If you remember, after the Trump Admin met with China, we noted that the shit soybean deal signed and touted by Bessent as a win made absolutely no sense. The deal signaled that either, A) the Trump admin had lost all of it’s leverage and was tucking-tail, or, B) it was Art of the Deal – and I was blind to the 4-D strategery being played.

With congressional momentum picking up on a tariff roll-back, the about-face on China and pan-handler type deal we made on Soybeans makes much a lot more sense. Keep an eye on this development as it will spark considerable volatility if it does occur. Currency volatility is getting zippy, that’s generally a sign that major flows and tectonic money-plates are starting to move.

Yesterday’s EIA report was notably bearish, which was largely a WoW normalization from the ultra bullish reports we saw last week – unless the bullish EIA trend is broken with a few consecutive weeks of bad reporting, we’re not overly concerned with the bearishness of yesterday’s report [thousand bbls]:

Crude: +5,202 vs -286 estimate
Gasoline: -1,847 estimate
Distillates: -2,500 estimate
Refinery Utilization: -0.60% vs +1.10% estimate
Tuesday night’s API report showed a crude build of +4,000 kbbls vs a draw estimate.

Technical Analysis:

Crude waddled it’s way below below 60.00*** yesterday as the Dollar strength and weak EIA report weighted. We expected this move under 60.00 to come with a bit of violence and at least give us some over-sold opportunities to attack. But, while price waddled lower, it has lumpenly meandered it’s way back above the Mendoza line of $60 this morning. It’s again waddled it’s way back below here into the US open. If this 60.00*** can somehow hold today, and we punch-up near 61.05*** with a strong close, than this region is worth leaning on.

But, the price action has just been so disappointing. It is very hard to get excited on the long-side after the major 60.00*** tech-level and an OPEC walk-back resulted in ZERO bounce.

Taking the long-side is kind of like betting on a 10-Yard dash between JB Pritzker and Joe Biden. It’s really not something you feel great about doing in the first place, and if you bet it, then you got to stick around all afternoon to watch a very sad and shockingly flaccid chain of events unfold.

I am lacking conviction across the majority of assets and asset classes at this point. The giant money flows that shift the tectonic plates of markets seem to be at an inflection point, and I am uncertain where, or how they move within this environment with these catalysts. Tariff walk-backs, and the Fed’s newfound hawkish’ness are the keys to watch – those two catalysts will dictate price action over the next 5-10 days and could spark serious opportunity (or risk).